What will be the regulation of cryptocurrency in the Russian Federation with the new minister

The government of Dmitry Medvedev, which resigned last week, has not been able toadopt the “Digital Assets Law”, whichwas supposed to mark the beginning of the regulation of cryptocurrency turnover in Russia. Should we expect its adoption under the new Prime Minister, former head of the Federal Tax Service, Mikhail Mishustin? If yes, then in what form could it be?

Mining-Cryptocurrency Portal.ru figured out Mishustin’s position regarding the cryptocurrency market, recalled his statements and plans regarding the industry. Spoiler: the digital economy is a priority, cryptocurrencies are not money, but taxes must be paid for them, and the digital ruble should not be expected in the near future.

Who is Mikhail Mishustin?

Mikhail Vladimirovich Mishustin is 53 years old - he isa year younger than Medvedev. In the 90s, Mishustin worked at the International Computer Club, but in 1998 he moved to the civil service - to the Federal Tax Service (FTS). In 1999, he became deputy head of the department, in 2004-2006 he headed the Federal Agency for the Cadastre of Real Estate (Rosnedvizhimost), and in 2007-2008 - the Federal Agency for the Management of Special Economic Zones.

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In 2008−2010 he worked in the investment business:as President of UFG Capital Partners and Managing Partner of the UFG Asset Management group. At UFG, Mishustin oversaw projects to launch a venture fund, real estate funds, as well as business development in the regions. From 2010 to 2020, he was the head of the Federal Tax Service of Russia.

Mishustin has a reputation as a technocrat and a competent specialist. The official tries to stay away from behind-the-scenes intrigues, but plays in the Night Hockey League and knows how to make friends with the right people.

What did Mishustin as head of the Federal Tax Service?

Over the 10 years of leadership of the Federal Tax Service, Mishustin turned itfrom a cumbersome, bureaucratic and unfriendly department to one of the most technically equipped and progressive in the world. Mishustin himself believes that he was building a “service company.”

The department listens to taxpayers,optimizing the payment of taxes. It is constantly introducing new mechanisms to increase taxes, but paying them is becoming easier. The FTS website now has 47 electronic services, as well as a system of personal accounts - this allows you to solve most of the tax issues online.

Praises Mishustina and business. Taxes are collected more strictly: increased control over offshore companies, illegal VAT refunds, bankruptcies and other gray schemes, increased personal responsibility of company owners. There is more certainty, and transparency of the rules and convenience of entrepreneurs value more than the opportunity to circumvent the law. The Federal Tax Service began to work more professionally, and the service is ahead of, perhaps, all government agencies in the implementation of IT technologies. The conditions and organization of work at the Federal Tax Service have now become transparent and understandable, as a result of which, for example, the number of on-site inspections has been reduced.

Under Mishustin, it was developed and implementedan automated unified tax data system “Tax-3” based on artificial intelligence, automatic VAT reconciliation, online cash registers, online monitoring for the largest taxpayers, as well as a Unified State Civil Registry Register, which takes into account the entire population of Russia. One of the innovations was the introduction of a tax regime for the self-employed, according to which freelancers and other people without an employment contract and individual entrepreneur status can legally work, paying only 4% and 6% taxes on their income.

This approach has shown excellent results.Over the past five years, tax collections have increased 1.4 times. The VAT tax gap (the difference between what taxpayers owe and what they actually paid) in Russia is less than 1%. This is the lowest figure in the world. Before Mishustin came, it was 20%.

What is Mishustin going to do as prime minister?

Before his appointment, Mikhail Vladimirovich met with representatives of the State Duma factions and told them what he was going to do as prime minister. Its program includes the following goals:

Reform public administration and carry out institutional reforms;
Reduce costs, restrictions and barriers to business;
Introduce modern information technology and turn the country into a digital platform;
To develop the military-industrial complex;
Leave unchanged personal income tax for the poor;
Introduce targeted assistance to the poor;
Register all households in a single register for two years and track each income;
Do not change pension reform.

The prime minister did not speak about liberalization of management, reduction of defense spending in favor of medicine and education, as well as about judicial reform.

Priority Digital Economy

On January 16, in his speech at a meeting withdeputies of United Russia, while still a candidate for the post of Prime Minister, Mikhail Mishustin called the development of the digital economy one of the main priorities of his work if confirmed in office.

“The first thing to do is todayseriously engage in institutional reforms. Government reform. And, of course, bring in the most modern information technologies. I will deal with the program, the national project “Digital Economy”. Without a doubt, the state should be a digital platform that is created for people…"- said Mikhail Vladimirovich.

Mishustin repeatedly publicly emphasized the effectiveness of digital platforms and the importance of the work of the Federal Tax Service in this direction. However, he sees them as a threat.

“Digital platforms are new efficiency. But this is a threat to entire sectors of the economy. Airbnb is great and a threat to hotels. What will happen to the automotive market due to the emergence of platforms and unmanned vehicles, we do not know ”, said Mikhail Vladimirovich in an interview with Kommersant in November 2019.

The crypto industry must be regulated

Last February, Mishustin spoke about the importance of regulating the crypto industry:

"Money that a young man can freelymoving across the border with the help of cryptocurrencies and other forms of payment, which the state does not notice and for which there is no regulation, is dangerous, we must deal with this. ”

We would like to remind you that the “Digital Financialassets" was adopted on first reading in May 2018, but was sent back for consideration in October due to a lack of definitions of key terms, such as cryptocurrencies. The law has not yet been adopted, despite the direct instructions of the president. In August 2019, it was only possible to adopt a law on crowdfunding, which came into force on January 1 of this year, which contains rules allowing for ICOs and the sale of certain types of tokens, but the issue of their further circulation has not been resolved.

Last May, while Prime MinisterDmitry Medvedev said that the popularity of cryptocurrencies has declined, and therefore the issue of their regulation has ceased to be relevant. However, on January 9 this year, Medvedev said that tokens need to be regulated at the legislative level. On January 13, Chairman of the State Duma Committee on the Financial Market Anatoly Aksakov promised that the law would be adopted in the spring. However, if it is adopted in its current version, it will not solve all the problems with regulation of the crypto industry.

At the end of November last year, rumors appeared aboutthe upcoming ban on the use of cryptocurrencies to pay for goods and services by the Central Bank (CB) and Rosfinmonitoring. Then the Central Bank stated that if such a decision is made, the regulator will consider it appropriate. At the same time, the Ministry of Internal Affairs is developing a mechanism for the arrest and confiscation of cryptocurrencies.

Cryptocurrencies are a financial instrument, not money

Not only not yet accepted in Russialegislation on cryptocurrencies, but there is no agreement between departments on the status of cryptocurrencies - this is a means of calculation, property and property law (as defined tokens in the crowdfunding law).

Mishustin first spoke about cryptocurrencies back in November 2017, at the height of the hype around them. Then he considered them a financial instrument:

“To become money, this is the whole story thatshould happen. Once paper money, when introduced into circulation, no one believed in it, the corresponding reserves of central banks had to be provided with a gold reserve. Today, cryptocurrency is a financial instrument ”- said Mishustin in an interview with RBC.

In November 2019, in an interview with Kommersant, Mikhail Vladimirovich named blockchain and cryptocurrencies, along with biometrics and 3D printing, among the technologies that the Federal Tax Service should take a look at.

Cryptocurrency transactions must be taxed

Back at the end of October 2017, VladimirPutin instructed to prepare amendments to legislation regarding taxation and registration of mining companies. They were supposed to be submitted for consideration before July 1, 2018, but the deadline was missed.

One of Mishustin’s achievements is the reform of tax administration, which allows centralized accounting of every cash receipt. Naturally, the official also wants to tax the income from cryptocurrencies.

In an interview with RBC in November 2017Mikhail Vladimirovich said that operations with cryptocurrencies should be taxed by analogy with operations with other financial instruments. Taxes must be paid on mining income. At the same time, do not forget about the risks of using cryptocurrencies:

"I am convinced that it is necessary to tax such operations, but correctly assessing the economic consequences of using cryptocurrency."

In November 2018, in an interview with VedomostiMishustin indirectly made it clear that he considers cryptocurrencies (“quasi-money” in Mikhail Vladimirovich’s terminology) to be one of the reserves for replenishing the federal budget without increasing the burden on business. He also considers them one of the popular cash-out and tax evasion schemes: “Obviously, it is important to be in the digital economy and understand these trends in order to identify and integrate into them so that they do not help to evade taxes.”

Previous view on the needtaxation of income from cryptocurrencies and mining was also expressed by the first deputy chairman of the Bank of Russia, Olga Skorobogatova. Then she noted that the positions of the Central Bank and various departments, including the Ministry of Finance, the Ministry of Telecom and Mass Communications and the Ministry of Economic Development, “on the main points coincide.”

Recall that now the procedure for taxation of income from cryptocurrencies is reflected in the following documents:

Letter from the Ministry of Finance in May 2018
FTS Letter in June 2018
Updates by the Federal Tax Service and the Ministry of Finance in November 2018
Amendments to the Civil Code

According to them, a special procedure has not yet been adoptedtaxation for cryptocurrencies, tax should be paid according to the general scheme - 13% of profit, that is, with a positive difference between the purchase and sale prices. A property tax deduction cannot be applied, but the taxable amount can be reduced by the amount of confirmed expenses. So far, there has been no judicial practice for non-payment of taxes on cryptocurrency trading in Russia, but everything can change quickly.

It's time to recognize that taxes are an inevitable price to pay.for the opportunity to work with crypto-assets while remaining within the legal framework. However, building effective cryptocurrency taxation is not easy and will take years. A number of countries, such as Bermuda, have already begun to work in this direction.

Cryptorubble is not worth the wait

In an interview with Vedomosti, Mikhail Vladimirovich forwarded the question of creating a cryptoruble to the Central Bank:

“This is a question for the Central Bank. But, of course, we need to think about how to prevent the creation of an alternative system that is not related to the state ”, — считает Мишустин.

Let us recall the position of the regulator and the authoritiesrelative to the crypto ruble. Initially, authorities believed that it could “minimize the number of anonymous transactions” and even avoid Western sanctions. In January 2019, Anatoly Aksakov stated that the crypto-ruble could appear within 2-3 years.

December 25, 2019, head of the Central Bank Elvira Nabiullinareported that the regulator is testing stablecoins in the “regulatory sandbox” and is studying the possibility of issuing a digital ruble. However, this is a distant prospect - first you need to weigh all the risks and understand what benefits the launch of a national crypto-asset from the Central Bank will provide. So far, according to Nabiullina, the risks for the financial market outweigh the possible benefits.

Finally

We hope that with the advent of Mishustin the long-awaited andthe tortured Digital Assets Act will finally be passed. But it is unclear in what form the options can be different: from the legalization of cryptocurrency transactions on regulated exchanges and the payment of taxes from them to a complete ban on the circulation of cryptocurrencies.

I am glad that legal entities and individuals do not wait until the state is determined, and develop the blockchain and crypto industry independently.

Do you think that with the advent of Mishustin, the attitude of the authorities towards cryptocurrencies will change? Share your opinion in the comments below!

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